GlaxoSmithKline's former China boss Mark Reilly on bribery charge

Chinese police have charged the British former head of GlaxoSmithKline with running a long-standing bribery and fraud scheme to boost drug sales in the country.

Mark Reilly, who graduated from University College London, has been accused of ordering his subordinates to form a “massive bribery network” that forced up drug prices and created more than $150 million (£89 million) of illegal sales, according to police.

They claim secret payments were made to doctors, hospital staff and government officials. The scale of the charges, following a 10-month investigation, are a blow to David Cameron who lobbied on behalf of Glaxo when he visited China last year.

Reilly stepped down as head of China for Glaxo last July and briefly left the country but returned there late last year. It was not clear if he had been detained but British embassy officials said they were in regular contact with him.

Two Chinese executives, Zhang Guowei and Zhao Hongyan, were also accused of bribing officials in the industry and commerce departments of Beijing and Shanghai, the official Xinhua news agency reported, quoting police in Hunan province.

The charges — which carry a maximum sentence of life in prison in the case of bribery — were seen as harsher than many industry insiders and China-based foreign executives had expected.

Glaxo said it had seen an official at the Chinese Ministry of Public Security today. A spokesman said: “We take the allegations that have been raised very seriously. They are deeply concerning to us and contrary to the values of GlaxoSmithKline. We will continue to fully co-operate with the authorities in this matter.

“We want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens.”

Chinese officials said 46 people were implicated in the case which was launched last June.

Kenneth Jarrett, president of the American Chamber of Commerce in Shanghai, said he was surprised at the “strong response” from the police.

“I would agree that it’s not what I would have expected because it seemed like Glaxo were co-operating very closely with the authorities,” he said. “I don’t think that anyone had been lulled back into complacency, but if anybody had this will wake them up,”

Under Reilly, Glaxo’s revenues in China have soared from 3.9 billion yuan in 2009 to 6.9 billion yuan, according to the official news agency.

This case is the biggest bribery affair involving a foreign company in China since Rio Tinto saw four executives, including an Australian, jailed for between seven and 15 years in 2009.